Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
12. Commercial Management Practices
And Strategy Development
CSX
Our Mission is to be
the safest, most progressive
North American
Railroad, relentless
in the pursuit of
customer and employee
excellence.
Swaziland Railway
Our Vision is to provide
an efficient transport
system that offers
total logistics to our
Clients.
Canadian National
Our Mission is to meet
customers’ transportation
and distribution
needs by being the best
at moving their goods
on time, safely, and
damage free.
Vision, mission, core values
Diagnostic analyses define key parameters around which a strategy can be developed.
The analyses provide insights on major risk factors and opportunities for
improvements, available options, and major constraints.
In developing a commercial strategy, it is common to distill a description of the
organization into vision and mission statements. A mission statement describes
what the organization does; a vision statement describes what the organization
aspires to be. Examples of mission and vision statements are shown at left and
many more can be found on company websites.
Although mission and vision statements can appear to be little more than advertising
slogans, or vague expressions of good intentions, they perform the very
useful function of conveying core values and future direction to internal and external
audiences. They explain the values the organization thinks it will take to
succeed. Mission and vision statements also provide a point of reference for
strategy development—“Will this strategy help achieve our mission? Will it move
us towards our vision?”
Some organizations also state their core values. A core value statement includes
organizational ambitions and ideals about teamwork, individuality, safety, stewardship,
and employee behaviors with one another and customers. Core values
become employee evaluation criteria and are often included in job descriptions.
Collectively, mission, vision, and core value statements help define corporate culture
aspirations and guide strategy development. To transition from a government
department to a commercially oriented organization, many railways must
replace an existing inward-looking, risk-averse corporate culture with a more
outward-looking, risk-taking culture. Typically, the board of directors prepares
the mission, vision, and core value statements and sets the fundamental direction
of a commercial organization. Universal objectives, key success factors, and success
drivers such as safety, cost control, profitability, and so forth, define what an
organization must do to survive but not how to do it. Combined, these statements
explain the essence of why an organization exists.
12.1.2 Strategy development
Developing a commercial strategy for a commercial railway is the responsibility
of the executive management team. Strategy development requires an understanding
of customers, the competitive environment, and market requirements,
combined with detailed knowledge of all railway assets including employees, organizational
structures, and physical assets. After a basic diagnostic is completed,
the executive management team will assemble and study all the components required
to build a strategy—financial analysis, mission, vision, and core values
statements, strategic alternatives, market and pricing strategies, opportunities
and threats. Then, they can begin to evaluate cost reduction and investment
strategies.
The executive management team should guide the strategy development process,
taking direction from the board and reporting back to them. The board of direc-
The World Bank Page 179